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The World's Largest Oligarchy?
March 1, 2011 7:09 AM   Subscribe

Is India an oligarchy? Late last year, when India's income tax office tapped the phone of well-connected lobbyist, Niira Radia, they were looking for evidence of tax evasion and money laundering. But what they found instead was what many consider evidence of an even bigger problem: "[T]he tapes reveal that the country that prides itself on being the world's largest democracy is really ruled by a small coterie of powerful people." Some of the leaked tapes that sparked the scandal are available online, on the website of the weekly magazine that first broke the story, as well as a few transcripts.

"Journalist and historian Prem Shankar Jha says the convergence of money and political power in India stems from a problem that's also fiercely debated in the United States: 'The lack of any system for financing elections.'" More context here. Perhaps not too surprisingly, considering the allegations of media collusion, there have been persistent complaints of a "media blackout" surrounding coverage of the story in India.
posted by saulgoodman (62 comments total) 15 users marked this as a favorite

 
A large nation which brags about its "democratic values" is ruled by a small number of elites?! Shocking. Unprecedented.

Maybe the U.S. should invade, and bring freedom to the people of India!
posted by sonic meat machine at 7:13 AM on March 1, 2011 [10 favorites]


"... is really ruled by a small coterie of powerful people."

ORLY?

Are there any other so-called democratic nations where this shocking situation is similar!?
posted by clvrmnky at 7:15 AM on March 1, 2011 [6 favorites]


I'm pretty sure the US has some checks and balances it's not using that India can borrow.
posted by tommasz at 7:22 AM on March 1, 2011 [24 favorites]


Yeah, it would be more surprising to find a republic where this wasn't the case. Is oligarchy inevitable with representative democracy, in the same way that winner-take-all elections lead to a two-party system? If there is a structural component, does it differ between presidential and Westminster-style systems?
posted by jtron at 7:23 AM on March 1, 2011 [3 favorites]


Yeah...I'm kind of having a hard time being shocked by this revelation. What democracy in this world isn't actually run by a well-monied/well-connected sub-set?
posted by Thorzdad at 7:23 AM on March 1, 2011


I was just thinking how I could express my surprise and outrage at these stunning revelations without seeming snarky. I guess, charitably speaking, it's not often the curtain is pulled back quite so bluntly. And I hope it won't offend anyone to suggest that perhaps this is more shocking in India, where cynicism is not most people's default setting.
posted by londonmark at 7:24 AM on March 1, 2011 [2 favorites]


Also because Ratan Tata had Niira Radia as a PR person at one point. I was reading this stuff during my two day stopover in Jan and part of the shock is due to a) she came in from abroad and zoomed to the top rather suddenly and b) was far too well connected.

Lobbyists tend to be perceived in India as 'chamchas' or sycophantic yes men and fawning flattering hangers on, not power brokers wielding tools like blackmail and influence. The role reversal methinks was the real shock.
posted by infini at 7:27 AM on March 1, 2011


Is __ an oligarchy?
posted by ennui.bz at 7:35 AM on March 1, 2011


So the thing about the Radia tapes is this:

1) The actual recordings themselves were done by the Income Tax department and are quite easily illegal, if not shocking in that the IT department apparently ran a trace on specific mobile numbers from the network itself. If the humble IT department can tap phones merely on a hunch, what else can the CBI do? What else can RAW/ IB/ etc tap?

2) Easy to think that they're a desi version of Wikileaks of sorts, in that you suddenly have this huge trove of raw data involving powerful people available to anyone interested.

Perhaps not too surprisingly, considering the allegations of media collusion, there have been persistent complaints of a "media blackout" surrounding coverage of the story in India.

Yeah, so there are a lot of people who believe that all that gets published in the English newspapers is what people read. Not true; the English media is a very minor piece of the overall media jigsaw puzzle, with the vernacular media (both news channels and newspapers) overwhelming the English media's circulation exponentially. From my vantage point, I believe it has been covered quite adequately; note that most of the links in the post are to OutlookIndia.com, a "mainstream" Time/Newsweek-like newsmagazine in English and Hindi.

(Now, there are concerns about media's critical reporting - it's quite shocking just how partisan everything has become - but the Radia tapes were well-covered if you look beyond Hindustan Times, Times of India etc. )

The following, however, is where Indians should shake out of their cynicism and start questioning just what the eff has been happening with the country. From this article:
India has 66 resident billionaires whose combined wealth of roughly $244 billion is equivalent to more than a fifth of the country’s $1.1 trillion gross domestic product.
66 people control a country of a billion people. 66.
posted by the cydonian at 7:42 AM on March 1, 2011 [3 favorites]


Is oligarchy inevitable with representative democracy

Robert Michels argued (and I tend to agree with him) that oligarchy is inevitable, full stop.
posted by jedicus at 7:46 AM on March 1, 2011 [4 favorites]


66 people control a country of a billion people. 66.

Good thing that can't happen here, rite? Oh wait...

Robert Michels argued (and I tend to agree with him) that oligarchy is inevitable, full stop.

I absolutely don't agree and think this view just reflects a contemporary cultural trend toward nihilism and fatalism, but assuming oligarchy is the case in the US now (whether that's inevitable or not), we should update our school curricula and the language of our media discourse to reflect this reality. All this bunk about the US being a people-powered constitutional democracy or a democratic republic just fills people with false hope.
posted by saulgoodman at 7:55 AM on March 1, 2011 [5 favorites]


Does every thread about every other country have to be a big US bash-fest? Give it a break already.
posted by shivohum at 7:59 AM on March 1, 2011 [2 favorites]


If I answer "yes," is that my Orientalism showing? Because I'm not naive enough to answer "no".
posted by Rat Spatula at 8:01 AM on March 1, 2011


Seriously - the US has issues, but saying its an oligarchy is an insult to actual oligarchies.

I mean really. Look at how the rich live in any of the BRICs compared to the US and come back to me about how the rich in the US live an equivalent lifestyle or have a similar level of relative political impact.
posted by JPD at 8:10 AM on March 1, 2011 [1 favorite]


Country with with officially abolished caste system has unofficial caste system.
posted by Panjandrum at 8:21 AM on March 1, 2011


Country with with officially abolished caste system has has unofficial caste system.

fixed that for you.
posted by quonsar II: smock fishpants and the temple of foon at 8:36 AM on March 1, 2011 [1 favorite]


What democracygovernment in this world isn't actually run by a well-monied/well-connected sub-set?

FTFY, Thorzdad (although I agree with JPD, that true oligarchies are a not-universal form of government, and the US is not one).
posted by IAmBroom at 8:55 AM on March 1, 2011


I mean really. Look at how the rich live in any of the BRICs compared to the US and come back to me about how the rich in the US live an equivalent lifestyle or have a similar level of relative political impact.

Labour is cheaper so its far easier to have someone to do everything for you - usually different someones and you don't have to even be upper middle class to have a sweeper, dishwashing human being, car washer (daily), house cleaning and of course garbage disposal.

Now for the rich, the added expenses include silent gensets for uninterrupted power supply in the backyard, care/support of extended families of any adn all household help including medical, pensions and spousal support, security services, water supplies, premiums for decent food, cost of maintaining brand name cars in harsh environments etc etc etc

Its a trade off between the first and the third world.
posted by infini at 8:58 AM on March 1, 2011


Its not simply a question of lower labor costs. Its about the mutability of laws, flexibility of tax regimes, the value of personal connections, etc, etc.

How the rich benefit from those things in the developing world compared to the developed world even at its absolute worst are on two totally different scales.
posted by JPD at 9:01 AM on March 1, 2011 [1 favorite]


All this bunk about the US being a people-powered constitutional democracy or a democratic republic just fills people with false hope.

false hope? (Like false consciousness) Hope of what even if it were false.
posted by clavdivs at 9:07 AM on March 1, 2011


Seriously - the US has issues, but saying its an oligarchy is an insult to actual oligarchies.

I half-agree--although I think there's a recently accelerating trend in this direction, but as long as we don't take it for granted as inevitable, we can reverse it. We're to some extent trying to do that now in Wisconsin.

But... more than half the initial comments in the thread took it for granted that not only is the US already an oligarchy, but implied that this fact is so widely accepted as to not even come as a surprise. And one comment even went so far as to claim that it's inevitable for democracies like ours to become oligarchies. So yes, there's an issue here, but I wouldn't characterize it so much as US-bashing as an increasingly internalized public acceptance in the US that our system has devolved into a form of oligarchy as well. Even Noble Prize winning economists with columns in the NY Times have written about America's oligarchs, so to pretend such claims are as prima facie absurd as you might want them to be is disingenuous.

I think these growing public attitudes are the result of personal experiences many of us have had with public corruption and legal favoritism for the wealthy. I've certainly seen it on a fairly routine basis in my life and career, and I seldom meet anyone who works in and around government at any level who doesn't have similar experiences to recount.

But US is not India, and this is India's scandal, not our own, so point taken.
posted by saulgoodman at 9:25 AM on March 1, 2011


How the rich benefit from those things in the developing world compared to the developed world even at its absolute worst are on two totally different scales.

Heh, you obviously don't live in Florida...
posted by saulgoodman at 9:29 AM on March 1, 2011


I always scratch my head when someone compares individual wealth to the GDP. One is a value generated over years, or perhaps from a singular event. The other is a flow, a rate, that occurs annually.

Saying that some number of people own wealth equivalent to 1/5 the GDP is like saying someone owns a lake that holds 1/5 the amount of water that flows through a river each year. Yes, its a lot of water, but it doesn't mean that they control the river.
posted by zippy at 9:31 AM on March 1, 2011


Yeah...I'm kind of having a hard time being shocked by this revelation. What democracy in this world isn't actually run by a well-monied/well-connected sub-set?
Well, Iceland. Particularly since the economic collapse they ended up kicking their bankers out of power.

Just because it's the case in the U.S. doesn't mean it’s the case in, for example, sweeden or something. It may be true in a lot of countries.
I mean really. Look at how the rich live in any of the BRICs compared to the US and come back to me about how the rich in the US live an equivalent lifestyle or have a similar level of relative political impact.
What are you talking about? I mean, can you give some examples? The only thing I can think of is that they tend to have a lot less money. How many billionaires are there in Brazil compared to the U.S? Maybe in Russia they have more power. In China power is held by cliques in the party, not by rich industrialists. Not that there isn't overlap but the very wealthy don't run the government yet (maybe in a few decades the Chinese government will be fully corrupted)
Its not simply a question of lower labor costs. Its about the mutability of laws, flexibility of tax regimes, the value of personal connections, etc, etc.

How the rich benefit from those things in the developing world compared to the developed world even at its absolute worst are on two totally different scales.
I see plenty of examples of those kinds of thing for the super-rich in the U.S as well. Look at the 'flexibility of laws' with regards to Goldman Sachs, for example.
Saying that some number of people own wealth equivalent to 1/5 the GDP is like saying someone owns a lake that holds 1/5 the amount of water that flows through a river each year.
Yeah. But it's a big lake. For example, the Mississippi river ejects 600 thousand cubic feet of water per second into the ocean. That's 25 cubic miles or almost a quarter of Lake Erie's volume.
posted by delmoi at 9:54 AM on March 1, 2011 [1 favorite]


Saying that some number of people own wealth equivalent to 1/5 the GDP is like saying someone owns a lake that holds 1/5 the amount of water that flows through a river each year. Yes, its a lot of water, but it doesn't mean that they control the river

I understand the comparison can be an odd one - but consider the fact that owned wealth is what generates revenue. In other words, the lake is the source of the river not just part of the river. So the river is very much controlled by the lake.

The concentration of wealth in India is staggering. On a business trip, I was driven through the wealthy disctrict of Delhi and the size of the homes were insanity. Quite literally the size of warehouses. What was heartbreaking was that servants were stationed to sleep on the driveways of these homes - to act as both gates and alarms for intruders - and hopefully not as speed bumps.
posted by helmutdog at 9:57 AM on March 1, 2011 [1 favorite]


Wait seriously you guys don't see the differences in power differentials in places like Russia, China, Indonesia, India, Brazil as compared to the US? Come on. I think half the people who bitch and moan about how fucked up the US is just haven't ever been to other countries or if they have they've kept their eyes closed. I mean this IS NOT to say the US hasn't seen a disturbing increase in income inequality, or that Citizens United et al have not had an awful impact on politics - I'm just saying comparing the US to actual oligopolies is a fucking joke. Go talk to someone who has lived in an actual oligopoly and was not an oligarch themselves.

I mean just look at taxation schemes in most developing countries.

Even Noble Prize winning economists with columns in the NY Times have written about America's oligarchs
Listen I love Krugman, and certainly the behavior of the Kochs is interfereing in the politcal process is unacceptable, but to call the US an oligopoly is just wrong, and I suspect that were you to ask him "Is the US an oligopoly Yes or No" - the answer is no.
posted by JPD at 10:05 AM on March 1, 2011 [5 favorites]


Country with with officially abolished caste system has unofficial caste system.

Glad Panjandrum finally called out the 800-lb Hindustani gorilla in the room here by name. It's staggering that NPR or anyone else would discuss Indian oligarchy in any depth at all without reference to the caste system.

India is a nation of more than a billion with an illiteracy rate around 35 percent, where something like half the residents have no electricity in their homes. Which is to say there are more Indians who can't read and have no access to light switches than there are Americans.

India is a "democracy" where these poorest people, who are often bound by their caste to lifelong indentured servitude, are brought by their employers to polling stations and instructed to vote for a particular pictogram. (Each party is represented by a symbol on the ballot for the aid of illiterate voters; trying to remember which party is the old-timey telephone . . .) From 2004 to 2009, India's federal railway minister was a fellow by the name of Lalu who had previously been chief minister of Bihar, India's poorest state, and who'd resigned that post just ahead of being sent to prison on charges of embezzling millions from an animal husbandry program; he then had his wife installed as chief minister and governed the state by proxy from behind bars.

The backlog in India's courts is something like 31 million cases, which would take an estimated 320 years to clear. If there were anything like an institutional push to do so, which there emphatically isn't. Think how easy it is, as a politician on the take or an oligarch handing out bribes as a regular part of your daily business, to rig a system that broken. Think of what it does to your sense of justice as an ordinary citizen if you know any accusation you make - especially against someone rich and powerful - won't ever make it to a courtroom.

Much of India's government barely functions in its official role. It's the unofficial channels of caste that hold the most sway in many circles. The caste system is the kind of self-perpetuating hereditary power structure that the most ambitious oligarchies aspire to be; if I wanted to be mean about it, I'd say that mere oligarchy would be an improvement for India.
posted by gompa at 10:13 AM on March 1, 2011 [2 favorites]


Or another stat, which seems particularly impressive if you think of it from the point of view of my native Canuckistan: India has 10.5 judges per million people. So imagine the democracy we'd have if Canada had 300 judges keeping watch over it.

But yeah, sure, the government's owned and operated by and for rich people because of campaign financing.

(Another thing about India: even its most crusading journalists are members of a tiny, powerful, partially caste-defined minority, whose vestedness of interest in the status quo would make the hackiest Fox News reporters blush - and then yearn for a household staff of ten of their own.)
posted by gompa at 10:25 AM on March 1, 2011


JPD: And I honestly think that you have your eyes closed to the experiences of many rural and working class Americans. And that maybe you aren't sufficiently aware of the extent of the routine power imbalances and corruption at state and local levels of government in the US. So we're at an impasse, and it's just down to different judgments. Lastly, I would point out that former Secretary of Labor Robert Reich also believes that the US now faces a historically unique risk of becoming a full-fledged plutocracy/oligopoly/oligarchy (take your pick).

As for the situation in India, I've often heard anecdotally that caste still plays an enormous, if less overt, role in contemporary Indian society. I've also heard that a lot of low-level corruption--contractors demanding bribes, etc.--is extremely common, and that so-called "black money" (what we might call money paid under-the-table) accounts for as much as or more than 80% of real economic activity in India. Both these factors seem like they could contribute to the kind of internal fragmentation of society that makes conditions right for oligarchy.
posted by saulgoodman at 10:33 AM on March 1, 2011


Well, judges in India are appointed by elected officials, so it's not crazy to imagine the potential for judiciary abuse if the elected officials are corrupt.
posted by saulgoodman at 10:37 AM on March 1, 2011


not unlike Yukos oil.
posted by clavdivs at 10:45 AM on March 1, 2011


saulgoodman - you are one of my favorite members here. Seriously. I'm not looking for a fight.

Respectfully comparing the plight of rural americans to the powerlessness of the underclasses in the developing countries is just utterly preposterous. Again - this is not to say that we shouldn't be pissed off about our current situation in the US, and I don't mean this in a "you poor people don't know how well you have it" sort of way - but really - arguing the US is anything remotely approaching an oligopoly is just a joke.

I mean I don't need to give you data on how much time I've spent in the developing world, vs time I've spent in poor rural america - but its a lot more of the latter then the former. And they are absolutely nothing alike in terms of powerlessness.
posted by JPD at 10:50 AM on March 1, 2011


I've also heard that a lot of low-level corruption--contractors demanding bribes, etc.--is extremely common

Try conducting any official business in India without bribing someone. Go ahead, I dare you. They've implemented zillions of extra steps in an apparent attempt to limit corruption, but all they've really done is create a zillion extra people who need to be bribed.

Want to get a passport? Just to pick one corruption hoop at random: be sure you've bought the right kind of stamp paper, from the right shop, or the clerk will "lose" your application. To pick another hoop: be sure you've accidentally left a few hundred rupees in your folder, or it may again be lost. Better pray you put enough in there, or the last guy in the paperwork chain will get pissed, and then you're lost again. But not too much of course, lest they think you're trying some kind of sting!

Did you dot all the i's (literally)? If not, be prepared for forty minutes of screaming by a random functionary. Naturally, his sense of grammatical propriety can, of course, be placated by a small payment. Just a special fee, to compensate for the pain suffered by anyone who sees an undotted-i.

After you've jumped through forty hoops and finally gotten the paperwork submitted, you'll be surprised that very evening by a local police officer, who has been informed that you're applying for a passport and had decided that now is the opportune time to come by for a "security check".

This security check will consist primarily of probing questions trying to determine how much money you have, how much money you are likely to make overseas, and therefore how many lakh you can be shaken down for. Since NRI are all fantastically wealthy, of course.

This security check, incidentally, will only end when your neighbor sees what is happening and comes over for a visit. Just to say hi -- and then (purely coincidentally, of course, heaven forbid the neighbor were clever enough to plan this) loudly talking on the phone to the local chief magistrate. Whereupon the officer will suddenly decide his job is done, and the chief magistrate will be sent a small token of thanks the next time his particular ethnic subgroup is celebrating a festival.

Oh, but wait! There's a whole 'nother group you need to bribe, now that you've got the passport! Say hello to VFS (because the US Embassy outsources visa arrangements, rather than dirtying their hands with the actual tasks of an Embassy)! Be sure to bring your wallet!

Americans. You have no fucking idea how pervasive corruption can be.

Take a wild guess how I know this.
posted by aramaic at 11:00 AM on March 1, 2011 [9 favorites]


Let's memail it out, JPD, and let the thread get back to its thing...
posted by saulgoodman at 11:01 AM on March 1, 2011


Well this is clearly so much worse than when India was ruled by various emperors, kings and rajahs before those evil colonialists showed up. Because...er...lemme get back to you on this.
posted by anigbrowl at 11:11 AM on March 1, 2011


Look at how the rich live in any of the BRICs compared to the US and come back to me about how the rich in the US live an equivalent lifestyle or have a similar level of relative political impact. -JPD

Challenge accepted and a quick lookup online finds me some numbers:

BRIC & G7 economies in order of Most Fair to Least Fair by Gini Coefficients '08

France 28.0
Germany 28.0
Canada 32.1
Italy 33.0
United Kingdom 34.1
Japan 38.1
Russia 42.3
United States 45.0
China 46.9
India 53.5

Not to put too fine a point on it, but I think that means you can only argue that the US doesn't compare to the BIC companies.
Brazil 57.0
posted by fartron at 11:27 AM on March 1, 2011 [2 favorites]


Well, on a social note, it is polite to bring a gift when someone invites you to thier home.
posted by clavdivs at 11:28 AM on March 1, 2011


Pasting error on brazil. You can see where it was meant to go though.
posted by fartron at 11:28 AM on March 1, 2011


Fascinating how centuries of illusions are being stripped-away by the eye-opening Internet.

Now the toss-up question: does this worldwide exposure to the realities of existence portend worldwide ... 1. revolution and reform, 2. adaptation, submission and a thousand-year Reich?

This chaotic system may respond to the smallest input in unexpected ways, so remember to exercise responsibility: the answer you give may be a self-fulfilling prophecy.
posted by Twang at 11:33 AM on March 1, 2011


fartron, I am looking at the List of countries by income equality and the order of countries is a bit different from yours if sorted by the UN Gini or the CIA Gini.
posted by vidur at 11:48 AM on March 1, 2011


if i wasn't carrying an old tattered indian passport I'd make a snide remark on how FPPs on Indian subject matters seem to have devolved to rah rah usa in some form, shape or the other
posted by infini at 11:50 AM on March 1, 2011 [2 favorites]


I just did a quick googling, it's possible my source confused different gini sources. The general picture is the same in either though: the US much more related to the BRICs in terms of economic inequality than the G7s.
posted by fartron at 11:55 AM on March 1, 2011


infini, perhaps you should get your passport renewed and let us know how much corruption you encountered.
posted by vidur at 12:02 PM on March 1, 2011 [1 favorite]


farton, you are right about the broader picture. I just wanted to put a source in the thread, or else it could devolve into an argument about the numbers.
posted by vidur at 12:04 PM on March 1, 2011


Yes brazil - where the upper classes live in sequestered compounds and travel around Sao Paulo by chopper, where masses of the population live in shantytowns, where there is massive geographical wealth disparities is certianly more egalitarian then the US. Jesus christ don't let ideology blind you to reality,

GDP per capita Highest: We'll exclude the Federal District - this massively improves your position BTW -
Sao Paulo - 22,697
Poorest - Piaui - 4661

US States GDP/Capita
California - 66,000
Mississippi - 30,000

GINI is just one metric in measuring income inequality.
posted by JPD at 12:05 PM on March 1, 2011


is certianly more egalitarian then the US

Your strawmen are flimsy enough that I feel comfortable stepping out of this argument.
posted by fartron at 12:07 PM on March 1, 2011


vidur - I have to do just that very soon, so I shall indeed document the process. Though it'll be up in teh Arctic. I have had one of my passports done in New Delhi and I went through the entire process without having to pay anything extra nor was I asked for a bribe. Perhaps its because I asked politely and didn't sneer at the patience required for the 1950s bureaucracy?

But wait... its best I leave this thread before I find myself down a slippery slope of defending things that I'm not even uber jingoistic about. It is what it is.
posted by infini at 12:08 PM on March 1, 2011


The fuck is that a strawman. You are the person who attempted to argue that Brazil was a more egalitarian society then the US.
posted by JPD at 12:15 PM on March 1, 2011


I mean really - you are trying to argue Russia is less oligopolistic then the US. Think about that for like ten seconds.
posted by JPD at 12:18 PM on March 1, 2011


I never argued that. Maybe you should look up what a gini coefficient means before you claim it is a less valid measure than your personal experience.
posted by fartron at 12:21 PM on March 1, 2011 [1 favorite]


wrong guy to play that with I'm very well aware of what a gini coefficient was. I was never arguing income inequality nor was anyone else in the thread. It was about the power of the wealthy.

Here wait I'll even quote what you quoted:
Look at how the rich live in any of the BRICs compared to the US and come back to me about how the rich in the US live an equivalent lifestyle or have a similar level of relative political impact.
posted by JPD at 12:27 PM on March 1, 2011


The question is about even application of rule of law, not about income inequlity.
posted by JPD at 12:29 PM on March 1, 2011


get a room you two
posted by marienbad at 12:34 PM on March 1, 2011 [1 favorite]


maybe next summer
posted by JPD at 12:39 PM on March 1, 2011 [1 favorite]


If you happen to know of measures of socio-economic power that are more revealing than income and wealth, I'd be happy to look at those numbers too.
posted by fartron at 1:39 PM on March 1, 2011 [1 favorite]


Twang, that's quite an impressive false dilemma you have going on there. Perhaps, given the Indian context, we can look forward to a 21st century update to the Jungle Book...
'Brothers and sisters, for too long, we have cowered in the shadow of our oppressors,' he began. 'But we will be downtrodden no longer. Let them face this one fact: there are many more of us, than there are of them!' A sigh of assent ran through the room, quickly falling away to silence as they listened for more, ears pricked that they might hear every revolutionary word. 'Tonight, my brothers and sisters - the battle begins!' A sharp collective intake of breath, the rustle of heads turned, glances exchanged, nods acknowledged. The speaker waited, letting the idea sink deep into his audience, stiffening the spines that had been bent for so long.

'The battle...' he resumed, 'of the mice against the elephants!'
Should a country the size of India, with such a low median level of income, be run by a small clutch of billionaires for their own advantage? Of course not. Nor should a country the size of China be run by a small clutch of party politicians for their own benefit. Nor should Russia be run by a bunch of autocrats for their own benefit, and so on. And none of them are, completely: powerful elites are in competition with each other to some degree, and while some of them seek to maximize their own benefit by reducing the benefit of as many others as possible, as quickly as possible, others seek to maximize their own benefit by increasing the welfare of others, hoping that a loyal clientele will prove more useful than engineering the disorganization of their opponents.

With relatively short or attenuated democratic institutions in these three countries, it's not very surprising that traditional power structures deriving from feudal systems will continue to appear. In less developed economies they're just more readily apparent because democratic institutions are not as well established, but they're easy to find in the history and current affairs of developed countries too. India continues to be a more democratic country than China or Russia, insofar as it is more transparent despite the widespread corruption. The fact that monetary wealth is a good proxy for political power, and that the powerful individuals can be fairly readily identified, is one of the characteristics of a democratic political system and a market-based economic one. It's transparent because monetary wealth is quantifiable.

China has many wealthy people, but to understand the distribution of political power, one needs to study the organization of that country's communist party; it's more difficult to form estimates of who wields power and how they got it, as internal party politics are a curious mix of patronage and procedural maneuvering. On the other hand, the system in China is moderately formalized, partly to avoid a repeat of the destructive chaos during the country's cultural revolution. In Russia, there's neither a regular rule of law nor a self-perpetuating party system; although the country has the trappings of a democracy, Putin is basically an autocrat who juggles personal power with an unfocused populism and inchoate institutions. Money confers some degree of power in Russian politics, but not as much as a healthy personal relationship with Vladimir Putin or with the members of his social circle. So the distribution of political power there is more mysterious, less predictable, and (in the view of many) less safe for anyone who has to deal with it - one reason among many that there are a lot more people who are eager to invest in China than in Russia. I don't think Putin or Medvedev are really bad guys, but but as long as they remain in position it holds the country back somewhat, because outsiders are wary of doing business there.

Sure, we have corruptions and informal distributions of power in developed nations too, but in general our institutions are stronger than individuals. Even when a country goes badly off the rails, like various European countries did under fascism, it's easier for them to bounce back towards being a free society in proportion to the length of time they've had democratic institutions. Perhaps this is one of the lessons learned from organized religion; while institutions like the Catholic Church are largely hierarchical and for most of their history have had the same sort of internal power struggles as feudal monarchies, the absence of an aristocracy and instinct among members that the preservation and continuation of the institution takes precedence over any single head of the institution have led to the development of an institutional immune system. The institution's existence is validated by the fact of the institution's history being many times longer than that of a human lifespan, and thus similar to the history of a nation even if it has traded the territorial component for a methodological one - that is, a formal system of worship whose purpose is to mitigate the unpredictable danger of the unknown. In this sense, religion is the precursor to science and analysis, albeit an unintentional one.

Too much economic or political inequality is clearly bad, and history is the record of inequalities becoming excessively concentrated and subsequently being corrected by revolutions. If we could easily quantify the concentration of power, I suspect we could find a formula for predicting revolution derived from the diminishing marginal utility to the general population. It's fine having an emperor or the like as long the empire is successful; people are willing to tolerate a high degree of inequality as long as their own position is improving. So 2000 years ago, being an ordinary Roman citizen - even a slave in some cases - meant you were so much better off than most people who lived outside the Roman empire that having an imperial form of government seemed an entirely reasonable trade-off. It might be that the fall of the empire was not so much due to internal rot or some inherent flaw in the imperial model as the Romans' technological inability to speed up its internal communications any farther, even after building roads through most of the Roman empire.

On the other hand, there is no good evidence to think society would be better off if inequality were reduced to zero. Where large holdings of money become suspect, the influence of money can be mitigated, as it was in the Soviet Union and more recently in Russia where Mikhail Khodorovsky has been kept in prison mainly by fiat rather than by a neutral legal system. In these situations inequalities remain, they're just less easily quantifiable as discussed above. I imagine that technically speaking, Kim Jong Il's wealth is little different from that of the median North Korean person; the vast power and privileges he enjoys as a dictator are nominally the perks of the office rather than his personal property, much as the President of the USA only draws a modest salary by business standards but is able to command a very high level of utility while in office - travel via helicopter or jet plane, priority over everyone else at all times and so forth. The US is quite unusual insofar as no president has ever used this power in order to remain in office for longer than 8 years except during WW2 (an exceptional situation by any measure), or to suspend the constitution completely, or to make major alterations to the election process. (For those complaining that the US is an oligarchy, consider that most countries let the government of the day decide the exact timing of elections instead of sticking to a fixed schedule, providing US citizens with a massive and little-appreciated democratic dividend).

Whether money is the proxy of political power or not, there isn't even any evidence to think inequities of power ought to be reduced to zero. This was the (joking) point of my little parody about the mice and the elephants at the beginning: over the long run, wealth seems to end up in a Pareto distribution everywhere (typically summarized as 20% of the people holding 80% of the wealth, and 20% of those 20% holding 80% of the that 80%, ie 4% of people hold 64%...and so on). It's not that the wealthy or powerful are more deserving than the poor or helpless, but that even distributions are unnatural and probably lack utility. Nature does not distribute evenly, but has a mix of a relative few large creatures and uncountably many small ones. The persistence of life on earth for billions of years, even in the face of cosmic insults, suggests that diversity in size is as valuable as any other kind of diversity (such as omnivorous consumption or environmental adaptability).

But this may not even be an evolved trait, because we see similar power law distributions in the size of continents, the length of rivers, and the height of mountains. We even see them in the distribution of digits among the natural numbers; this is referred to as Benford's law and is used by the IRS to help spot tax cheats, who tend to submit fraudulent returns with an unnaturally even distribution of digits designed to look random. In the real world, distributions of digits have a much higher incidence of the digit 1, which accounts for ~30% of all digits (instead of the 10% you might expect), followed by the digit 2, which accounts for ~18% of digits and so on. The digit 9 only appears about ~5% of the time. Now, a corpus of numbers will not follow the distribution perfectly smoothly unless it is very large indeed, but the deviations from this pattern are usually less than a single standard deviation and thus marginal in comparison. This phenomenon is scale invariant; it doesn't matter what number base or system of measurement you employ, it will continue to appear. Also, it's fractal; it holds true for (say) the digits of real numbers less than 1, or between 3 and 4, or any other selection criteria you care to specify.

So think about this: if inequality of distribution is a fundamental characteristic of numbers themselves, maybe that particular level of inequality is both necessary and inevitable.

If this is so, then too much equality can result in dangerous instabilities as easily as too much inequality. Instead of relying heavily on a Gini coefficient in which 1 is total inequality (one person owns everything, nobody else owns anything) and 0 is total equality (everyone has exactly the same amount of weath), we should instead consider a Theil index or one of its derivatives, in which 0 is perfect equality but 1 represents a Pareto distribution, and arguably an optimality; extreme inequalities of distribution have values >1. Be warned that that definition is a drastic oversimplification for conceptual purposes, and properly understanding the application of the Theil index is more difficult than understanding Gini - for that matter, the 'higher is bad' rule of thumb usually employed in discussions of the Gini coefficient isn't helpful either.
posted by anigbrowl at 3:04 PM on March 1, 2011 [6 favorites]


Income distribution shouldn't necessarily be equal (in the sense that everyone's income or wealth shouldn't have to be equal in absolute terms), but the distribution should at least be a roughly proportional, gradually sloping linear continuum, rather than a dramatically uneven one with haves on one end and have-nots on the other and no smooth transition in between. The former circumstance is evidence of a breakdown in the markets. That's my take.
posted by saulgoodman at 3:21 PM on March 1, 2011


Try conducting any official business in India without bribing someone. Go ahead, I dare you. They've implemented zillions of extra steps in an apparent attempt to limit corruption, but all they've really done is create a zillion extra people who need to be bribed.

Want to get a passport? Just to pick one corruption hoop at random: be sure you've bought the right kind of stamp paper, from the right shop, or the clerk will "lose" your application. To pick another hoop: be sure you've accidentally left a few hundred rupees in your folder, or it may again be lost. Better pray you put enough in there, or the last guy in the paperwork chain will get pissed, and then you're lost again. But not too much of course, lest they think you're trying some kind of sting!
Well, low-level corruption is a problem, but it's somewhat orthogonal to wealth inequality. Wealth inequality in the U.S. is very high and equivalent to 3rd world countries (as opposed to most other developed countries). Sure, you might have trouble bribing a police officer but what about an SEC investigator or politician? Not that difficult

Simon Johnson, who used to run the IMF and had a lot experience with dealing with Oligarchies, and breaking them up as a part of IMF bailouts, said that in the U.S. the same situation was happening in the 2008 collapse and that there was definitely an oligarchy in the U.S.
This may seem like strong medicine. But in fact, while necessary, it is insufficient. The second problem the U.S. faces—the power of the oligarchy—is just as important as the immediate crisis of lending. And the advice from the IMF on this front would again be simple: break the oligarchy.
Oversize institutions disproportionately influence public policy; the major banks we have today draw much of their power from being too big to fail. Nationalization and re-privatization would not change that; while the replacement of the bank executives who got us into this crisis would be just and sensible, ultimately, the swapping-out of one set of powerful managers for another would change only the names of the oligarchs.
--
Not to put too fine a point on it, but I think that means you can only argue that the US doesn't compare to the BIC companies.
With China at 46 and the U.S at 45 they are pretty close.

JPD the fact that rich and poor people are more geographically intermixed in the U.S. has nothing to do with the wealth inequality of individuals. And Brazil under Lua has had one of the greatest decreases in wealth inequality recently. The inequality might be higher then here but it's dropping. In the U.S, it's increasing.

The question we are asking is about the super-rich, not the average rich person. Specifically how much power they have over the political system compared to the people. China, of course, is an autocratic regime. India and the U.S. are supposed to be democracies, but in practice the rich and powerful have a huge amount of control over the process.
posted by delmoi at 6:13 PM on March 1, 2011 [1 favorite]


If we could easily quantify the concentration of power, I suspect we could find a formula for predicting revolution derived from the diminishing marginal utility to the general population.

"Only in the abolition of abuses lies the means to answer our needs"

-Charles Alexandre, vicomte de Calonne. Speech at Assemblée des notables, Feb, 1787.

Those Artois Lawyers
21st century Jungle Book--heh

posted by clavdivs at 6:32 PM on March 1, 2011


Glad Panjandrum finally called out the 800-lb Hindustani gorilla in the room here by name. It's staggering that NPR or anyone else would discuss Indian oligarchy in any depth at all without reference to the caste system.

Part of the reason why nobody talks about the caste-system in relation to the Radia tapes controversy is because Nira Radia is Muslim (or at least her dad was), the lead oligarchs in whose behalf Radia lobbied were Zorastrian and the accused minister, A. Raja, is Dalit.

India is a "democracy" where these poorest people, who are often bound by their caste to lifelong indentured servitude, are brought by their employers to polling stations and instructed to vote for a particular pictogram.

While I don't deny caste isn't a factor in voting, to presume that the poor are "instructed" to vote for a certain party without their thought is actually quite contrary to how things are on the ground, and indeed, quite insulting to the down-trodden. India is one of the few countries in the world where the poor are more likely to exercise their free adult franchise than the rich; governments have been thrown out for claiming that India was "Shining" when the opposite was the case.

Nope, I have no problems whatsoever with the democratic process at all; there is churn, politicians get thrown out regularly, and they do have the fear of the ballot instilled in them. What I'm bothered about are power-structures _beyond_ the constitutional framework, mostly brought about by the sale of government-controlled entities such as the 2G spectrum, petrochemicals and so on, and that their power is getting entrenched now, seemingly regardless of who is in power. It just so happens, though, that this set of individuals aren't visibly grouped by caste-loyalty; caste does rear its ugly head elsewhere, but in the context of the Radia Tapes, it's difficult to see how it would matter.
posted by the cydonian at 7:09 PM on March 1, 2011


Well at least they don't have atomic bombs.

Doh!
posted by hal_c_on at 11:32 PM on March 1, 2011


Here's my take.

Both India and the US are oligarchies.

I think it's simultaneously true that the US is more unequal than India in terms of individuals' net worth (mainly because the rich in the US are really really fucking rich) and that the poor in India are much much worse off. I would take being a poor person in the US over being a poor person in India any day.
posted by peacheater at 6:29 AM on March 2, 2011 [1 favorite]


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